2015€¦ · asset base kshs 73.9 billion key performance highlights 8% earnings per share kshs 397...

2015KENYA PIPELINE COMPANY LIMITED

KENYA PIPELINE COMPANY LIMITED

P.O BOX 73442 - 00200 | NAIROBI, KENYATEL: +254 20 260 6500-4 | +254 20 354 0032Kenpipe Plaza, Sekondi Road | Off. Nanyuki Road,Industrial Area.Email: [email protected] | www.kpc.co.ke

2015Annual Report

& Financial Statements

2015 Annual Report & Financial Statements 2015 Annual Report & Financial Statements1


ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2015

Association of Kenya Insurers


Vision & Mission .............................................................................................................. 2Corporate Information ............................................................................................. 3 - 4Board of Directors ............................................................................................................ 5Photo Gallery .................................................................................................................... 6Performance Highlights ..................................................................................................... 7Chairman’s Statement ............................................................................................ 8 - 10Business Trends .................................................................................................. 11 - 12Managing Director’s Statement ........................................................................... 13 - 15Senior Management Staff .................................................................................... 16 - 17Corporate Governance Statement .................................................................................. 18Corporate Social Responsibility .......................................................................... 19 - 20Report of the Directors ................................................................................................... 22Auditors Report .................................................................................................. 23 -25

Financial Statements

Statement of Profit & Loss & Other Comprehensive Income ........................................... 26Statement of Financial Position ..................................................................................... 27Statement of Changes in Equity ..................................................................................... 28Statement of Cashflows ................................................................................................. 29Notes to the Financial Statement ........................................................................ 30 - 68

Table of Contents



VisionAfrica’s Premier Oil and Gas Company

MissionTransforming lives through safe and efficient delivery of quality

oil and gas from source to customer

Core ValuesIntegrity

Transparency

Accountability

Diligence

Team Spirit

Loyalty

Care for the Environment

Our Vision and Mission

Statements



DIRECTORS Mr. John Ngumi - Chairman

Mr. Joe Sang - Ag. Managing Director

Dr. Kamau Thugge, Principal Secretary, The National Treasury

Mr. Andrew Kamau, Principal Secretary, State Department of Petroleum

Mrs. Phoebe Ndonye -Alternate PS, State Department of Petroleum

Mr. Eric Korir - Alternate PS, The National Treasury

Mr. Marwa Maisori

Mr. Jerry Simu

Mrs. Faith Jepkemboi Bett - Boinett

Mrs. Felicity N. Biriri

Mr. Iltasayon Neepe (Major (Rtd))

Mr. Wahome Gitonga

AG. COMPANY SECRETARY Ms. Gloria Khafafa,

P. O. Box 73442 - 00200, Nairobi

REGISTERED OFFICE Kenpipe Plaza

Sekondi Road,

Off Nanyuki Road,

Industrial Area,

P. O. Box 73442 - 00200, Nairobi.

PRINCIPAL AUDITORS The Auditor General,

Kenya National Audit Office,

P. O. Box 30084 - 00100,

Nairobi.

DELEGATE AUDITORS Deloitte & Touche,

Certified Public Accountants (Kenya),

Deloitte Place, Waiyaki Way, Muthangari,

P. O. Box 40092 - 00100,

Nairobi.

CORPORATE INFORMATION



CORPORATE INFORMATION

PRINCIPAL BANKERS Commercial Bank of Africa Limited CfC Stanbic Bank Limited

Wabera Street CFC Centre Chiromo Road

P. O. Box 30437 – 00100 P.O. Box 72833 - 00200

Nairobi Nairobi

Equity Bank Citibank, N.A.

Kenpipe Plaza, Sekondi Road Citibank House

Off Lunga Lunga Road Upper Hill Road

P. O. Box 78569 – 00507 P.O. Box 30711 - 00100

Nairobi Nairobi

PRINCIPAL ADVOCATES Mohamed Muigai Advocates

MM Chambers 4th Floor

P. O. Box 61323 - 00200 Nairobi

Triple OK Law

5th Floor Block C, ACK House

1st Ngong Avenue, Off Bishop’s Road

P. O. Box 43170 - 00100 Nairobi



Board of Directors

Mr. John Ngumi - Chairman

Mr. Eric KorirAlternate DirectorNational Treasury

Mrs. Phoebe NdonyeAlternate Director

State Dept of Petroleum

Ms. Gloria KhafafaAg. Company Secretary

Mr. Joe SangAg. Managing Director

Mr. Wahome GitongaDirector

Ms. Felicity N. BiririDirector

Mr. Marwa KemeroDirector

Andrew N. Kamau Principal Secretary

State Dept of Petroleum

Mr. Jerry SimoDirector

Dr. Kamau ThuggePrincipal Secretary National Treasury

Mr. Neepe Iltasayon Director

Mrs. Faith J. Bett - Boinet Director



Photo Gallery

6



Asset BaseKshs 73.9 Billion

KEY PERFORMANCE HIGHLIGHTS

8%

Earnings Per ShareKshs 397

1%

RevenueKshs 21.4 billion

6%

Profit Before TaxKshs 10.7 Billion

4%

Throughput Volumes5.8 Million M3

3.3%

7

Stock piling of pipes at Pump Station No 5 - Maungu for the Line 1 Replacement Project



THE CHAIRMAN’S STATEMENT

Dear Shareholders,

On behalf of the Board of Directors, I am honoured to present to you the Annual

Report and Financial Statements of the Kenya Pipeline Company Limited (“KPC”

or the “Company”) for the Fiscal Year ended 30th June, 2015, a year that saw the

Company continue its track record of recent years of solid financial performance,

ample testimony to having the right strategy, strong leadership and a dedicated

workforce.

Economic EnvironmentDuring the period under review, Kenya and the surrounding East African

countries registered strong economic growth, with the region

averaging 6.7%, one of the highest growth rates worldwide.

In Kenya, this growth was accompanied by broadly stable interest and exchange rates. Therefore, the Company was able to

reap from both economic and macroeconomic stability to continue its heavy investment in enhancing its pipeline and pulling

capabilities.

Turning to the oil and gas sector: while midstream, which is where KPC operates, continued with its recent growth, the

potential for the upstream sector to become a major contributor to the Kenya and regional economies became increasingly

evident, notwithstanding lower oil and gas prices, a phenomenon driven by a combination of slower global growth and

increased oil and gas supply. KPC is well placed to exploit the midstream opportunities presented by this growth in the regional

oil and gas sector, and is already part of the Kenya Government’s efforts to build a crude oil pipeline to Lamu.

Growth Strategy

During the year under review, the Board approved and adopted KPC Vision 2025 - a 10-year transformational plan aimed

at creating a world class oil and gas organization with the end goal being to become Africa’s Premier Oil and Gas Company.

KPC Vision 2025 has five strategic pillars:

i. Business Leadership in the Kenya Oil and Gas Sector

This pillar recognizes KPC’s unique positioning to pursue growth, expansion and diversification based on the platform of its

existing business. Key projects to drive this Pillar include:

a) The new 20-inch 450-km ultra-modern petroleum products pipeline (‘Line V’) from Mombasa to Nairobi. The new

line will enhance product flow of 730 thousand litres per hour on the existing pipeline to one million litres per hour

to meet growing local and regional demand in the next 30 years. Anticipated completion date is September 2016.



THE CHAIRMAN’S STATEMENT (Continued)

b) The 10-inch 122-kilometre pipeline (‘Line VI’) from Sinendet in Nakuru County to Kisumu which is intended to increase

volumes of product moved by an additional 360 thousand litres per hour. Anticipated completion date is April 2016.

c) The Hoima - Lokichar - Lamu Crude Oil Pipeline for which the Company expects to be the Government’s implementing

agency for its construction and operation. Inception of construction of this pipeline, and its scope, will depend on the

final decisions taken by the Kenya Government in conjunction with other regional Governments.

d) Liquefied Petroleum Gas (LPG) which will involve the construction of an inland distribution depot intended to make

access to cooking gas affordable to more Kenyans. KPC will work closely with the Ministry of Energy & Petroleum to

get this project going.

In addition to these individual projects, I am happy to report that KPC has engaged County Governments and other

stakeholders to gain buy-in into its pipeline expansion and storage strategy across the country. This strategy is designed

to meet KPC’s mandate of transporting and storing petroleum products safely across the country, thereby supporting the

Government’s agenda of delivering affordable and accessible energy to Kenyans to power economic growth. KPC is

determined to make this agenda a reality in the shortest possible time.

ii. Geographic Expansion across East Africa

The Company has developed a comprehensive strategy to drive geographic expansion in the Eastern Africa region that is

served through petroleum exports transiting through the pipeline depots in Kisumu and Eldoret. In pursuance of this strategy,

plans are underway initially to establish marketing presences in the region, to be followed by discussions with regional

counterparts and other stakeholders aimed at developing regional pipelines plus oil and gas handling facilities.

iii. People

Our people are the most critical resource we have. In pursuance of the goal of improving our people, we have embarked

on exercises in job analysis and profiling, job rotation and right sizing key departments to make them fit-for-purpose.

We have also continued our investment in on-the-job and campus training. We are confident the benefits of these

initiatives will come through from Fiscal Year 2015-16. We have also invested in ensuring our people understand

and are bought into KPC Vision 2025, and the response has been overwhelmingly positive.

iv. Systems and Processes

The Company’s new strategy calls for operational excellence in order to deliver high quality services. In line with this, KPC

has a continuous strategy of enhancing the application of modern technology as a business driver. In this regard, we will

continue pursuing the integration and optimization of different information application systems and technology platforms

currently deployed in the Company. We will also intensify our internal and external communication with the aim

being to ensure all stakeholders understand what it is we are aiming to achieve, and have bought into this goal.



v. Image and Reputation

Our Vision is to be Africa’s Premier Oil and Gas Company. Our Mission is to transform lives through safe and

efficient delivery of quality oil and gas products from source to customer. An integral part of both is our Image,

and our Reputation for doing good. We are focused on ensuring that our image and our reputation are and

remain at the highest levels possible. This calls for structured proactive engagement with all our stakeholders,

and real, visible and genuine acts of good corporate governance. We will keep our promise.

Appreciation

May I, on behalf of the Board, management and staff, start by thanking our customers. We do not exist

without you. We are aware of this, and will continue to strive for excellence in our service to you.

Next to our Shareholders, the National Treasury and the Ministry of Energy and Petroleum. We understand

the competing demands on your time and resources, and are grateful for the support and latitude

extended to the Board and management to enable KPC meet its mandate to Kenyans.

Finally, and very much of equal importance, let me express my appreciation to my fellow directors for their

commitment to the Company throughout the year. Being non-executive directors of public bodies

calls for commitment to service over and beyond the norm, frequently eating into scarce time and energy,

and I am very grateful for having an active, interested and vocal Board whose members have demonstrated

genuine desire to leave a better KPC and whose work, through the Main Board and the various Board

Committees, is critical in the drive to achieve KPC’s Vision and Mission.

May I also express the Board’s heartfelt thanks to management and staff. KPC is in the midst of a transformation,

never an easy task, and the Board truly appreciates the effort management and staff are putting into this drive.

JOHN NGUMI

BOARD CHAIRMAN

THE CHAIRMAN’S STATEMENT (Continued)



Business Trends to 2015

Earnings per Share

11



Business Trends to 2015 (continued)

s

12



Dear Shareholders,

It gives me great honour and pleasure to present to you the Kenya Pipeline Company

Annual Report and Financial Statements for the year ended 30th June, 2015. I am

singularly happy to report that KPC has recorded another year of remarkable financial

performance.

This epitomises the Company’s financial health coupled with a growing business portfolio

whose potential to power the local and regional economies cannot be gainsaid. Our core

mandate of receiving, transporting, and dispensing petroleum products through a pipeline

system remains central in shaping our operational efficiencies and future plans.

The strong performance captured in this report has not been by chance.

It is a function of prudent financial management, dedicated staff and effective guidance from the Board of Directors. The

Company also took a deliberate route to partner with our customers and other stakeholders to not only become more

customer focused but also be more efficient in our operations to ensure security of petroleum product supplies to the people

of Kenya and those in the neighbouring countries. In 2014-15, our commitment to operational excellence gave forth a strong

set of financial results. Below are some of the highlights of the key performance indicators that capture the year under review:

Financial Performance

The Company posted a 4.0% growth in Pre-Tax Profit to Kshs 10.7 billion for the financial year ended 30th June 2015

compared to Kshs 10.3 billion achieved in the Financial Year 2013/14.

Throughput

During the year under review, the Company recorded a 4% growth in throughput volumes to 5,798,398 m3 from 5,592,490

in FY 2013/14. This is equivalent to a growth of 11.5%. Domestic throughput also increased by 3% from 2,863,969 m3 for

the year ended 30th June 2014 to 2,963,092m3 for the year ended 30th June 2015. On the other hand, export throughput

increased by 4% from 2,728,521m3 for the year ended 30th June 2014 to 2,835,306m3 for the year ended 30th June 2015.

The increase in throughput is attributable to both investments in the enhancement of pipeline infrastructure and improved

operational efficiency.

Revenue

Throughput revenue increased to Kshs 21.4 billion in the year under review from Kshs 20.1 billion recorded in FY

2013/14 equivalent to a 6.0% increase.

THE MANAGING DIRECTOR’S STATEMENT



Operating Expenditure

Whereas the Company operated within the budgeted expenditure during the year, total operating expenditure

increased by 25% to Kshs 12.9 billion from the previous year’s Kshs 10.3 billion. The increase in the operating

expenditure is as a result of increased costs associated with pipeline maintenance, salary cost following review,

depreciation due to assets revaluation effect, impairment on revalued values and right of way compensation.

Financial Position

The Company closed with cash reserves of Kshs 11.7 billion compared to Kshs 11.1 billion at the end of the

previous year. This strong financial position and healthy cash flow will support the planned capacity

enhancement projects which include the ongoing Line 1 replacement project.

The Company met all its statutory obligations during the year under review and in particular remitted Kshs 3.6

billion to the Kenya Revenue Authority in corporation tax payments.

Key Capital Projects

During the period under review, the Company laid firm measures for the implementation of key capital projects whose status

is given below:

1. Replacement of the Mombasa–Nairobi Pipeline (Line 5):

This is a 450 Km 20-inch diameter pipeline which will replace the existing 14-inch diameter pipeline that has been in

existence for over 37 years to meet projected demand up to the year 2044. The project is expected to be completed in FY

2016/2017.

2. Construction of a Parallel Pipeline from Sinendet to Kisumu:

This is a 10-inch pipeline measuring about 122km from Sinendet to Kisumu which will be operating parallel to the existing

6-inch diameter pipeline (Line 3). It will tee-off at Sinendet and is expected to increase product supply to Kisumu depot. The

project is expected to be completed in FY 2016/2017.

3. Construction of Additional Storage Tanks at Nairobi Terminal:

This project will involve construction of additional tanks to provide sufficient capacity for receipt of higher volumes of Au-

tomotive Gas Oil (AGO), Motor Spirit Premium (MSP) and Jet A-1 products. The project will enhance operational flexibility,

capacity of product receipt and evacuation in Nairobi.

4. Construction of Additional Loading Arms in Eldoret:

KPC is installing additional truck loading facilities at Eldoret Depot to cope with the rising demand for petroleum products

in the Great Lakes Region. The objective is to enhance the supply of petroleum products to Western Kenya and the neigh-

bouring countries.

5. Hydrant Monitoring System at Jomo Kenyatta International Airport and Moi International Airport:

To ensure the accuracy and reliability of product deliveries at the local international airports, KPC is in the process of rolling

out a system that will be used to monitor and account for fuel uplifts at the dispensers real-time.

THE MANAGING DIRECTOR’S STATEMENT(Continued)



6. Security Enhancement Project (SEP):

KPC is enhancing security at all its installations through increased use of technology.

7. Proposed Hoima-Lokichar-Lamu Crude Oil Pipeline:

The proposed Hoima-Lokichar-Lamu Crude Oil Pipeline is to be implemented jointly by the Governments of Kenya, Uganda

and Rwanda. KPC is involved as an experienced partner in pipeline management to ensure early monetization of the com-

mercial discoveries of crude oil in Lokichar Basin in Turkana County.

The Company is gearing up to realise its vision of becoming Africa’s premier oil and gas company and we will relentlessly

pursue our strategy to realize this vision. Our commitment to transform lives through efficient delivery of quality oil and gas

from source to customer remains strong and with this corporate spirit, we are confident that we shall continue creating value

for our shareholders.

Appreciation

Last but not least, I sincerely thank our shareholders; the Ministry of Energy and Petroleum and the National

Treasury for their distinguished role in helping us achieve this success. I also appreciate the Chairman and the Board of Di-

rectors, in a very special way, for the support and guidance they provided to the management team throughout the year. To

our customers, we say a resounding thank you for choosing to maintain your business with us. Without you, these results

could not have been possible.

Above all, I extend my thanks to all KPC staff for working tirelessly to deliver this spectacular performance. Over the next

year, Kenya and the region will rely on this highly talented team to use all the skills and resources at our disposal to ensure

that we meet our strategic goals.

JOE SANG

Ag. MANAGING DIRECTOR

THE MANAGING DIRECTOR’S STATEMENT(Continued)



SENIORMANAGEMENT

Gabriel KiamaProjects Manager

Phillip KimeluAg. Chief Manager

- Technical

Joe SangAg. Managing Director

Beatrice OrgutSafety, Health, Environment & Quality Assurance Manager

Harry KithinjiSecurity Manager

Nicholas GitobuProcurement Manager

Felix RerimoiInternal Audit Manager

Jane NakodonyAdministration Manager

Samuel OdoyoAg. General Manager- Finance & Strategy



Tom Mailu Corporate Planning Manager

SENIORMANAGEMENT

Billy AsekaAg. Engineering Manager

Francis Muraya ICT Manager

John KitheteBusiness

Development Manager

Thomas NgiraHuman Resources Manager

Evans NyangayaAg. Operations Manager

Pius MwendwaAg. Finance Manager

Jason NyantinoCorporate

Communications Manager



CORPORATE GOVERNANCE STATEMENT

Kenya Pipeline Company Limited is committed to implementing good corporate governance principles and adheres to

integrity, high ethical values and professionalism in all of its activities.

As at 30th June 2015, the Board was made up of ten (10) members comprising a Non-Executive Chairman, the Permanent

Secretary Treasury, the Permanent Secretary Ministry of Energy and Petroleum, the Chief Executive Officer and six (6)

independent Directors with various professional backgrounds, vast experience and expertise. The Non-Executive Directors

are independent of Management. The Board has four committees that exercise delegated responsibilites, namely the Audit,

Human Resources, Technical and Finance Committees.

The Board’s skills and collective exeperience engenders healthy oversight over Management. The division of responsibilities

between the Chairman and the Chief Executive is clearly established and adhered to.

The Board Members are provided with the necessary resources to undertake their duties. Appropriate training is available to

all Directors on appointment and on an ongoing basis as required. The terms of reference for each of the Board Committees

are available.

Board and Committee papers are supplied to members on time, in appropriate form and quality to facilitate effective

deliberations. Directors have access to relevant information through the office of the Chief Executive and the Company

Secretary.

Board Meetings are held in line with an annual calendar except when critical business necessitates ad hoc meetings. The

following meetings were held during the year ending 30th June 2015:-

Meeting No. of Meetings Membership Average Attendance %

Full Board Meeting 12 10 80

Board Finance Committee Meeting 6 5 92

Board Human Resource Committee Meeting 7 5 93

Board Technical Committee Meeting 7 5 95

Board Ad hoc Meeting 2 5 90

Annual General Meeting 1 5 100

Board Audit Committee Meeting 4 5 85

To the best of our knowledge, no situations of conflict of interest arose at the Board.

............................................

Gloria Khafafa

Ag. Company Secretary



CORPORATE SOCIAL RESPONSIBILITY

Community Investment

Our commitment to our stakeholders and to improving the quality of lives of communities surrounding our installations is

central to our corporate identity. We always endeavor to have a positive impact on society through improving the lives

of individuals, groups and communities while at the same time enhancing our corporate image and brand. For us, reaching

out to the communities along the pipeline Right of Way through actively contributing to their socio-economic development

constitutes our core agenda through the Corporate Social Responsibility (CSR) program. The program is alive to this fact and

over the years, we have supported weaker sections of society by increasing their capacities and potential.

Our CSR program focuses on Empowerment of Youth, Women and Persons With Disabilities; Education; Health and

Sanitation; Provision of Clean Water; Sports; Energy Conservation and Environment Restoration; and Emergencies. The KPC

fraternity continues to volunteer their skills, time and funds towards community projects as a way of investing in the

communities adjacent to our pipeline network.

The KPC volleyball team remains the Company’s signature CSR project. The volleyball queens have helped place the

Company and the country on the world map through their various achievements in both local and international tournaments.

In building this team, we utilize the raw volleyball talent in the country and commit to nurture and grow it through the

trailblazing volleyball team. The sports ladies are accorded space to continue with their passion for sport while creating for

them other opportunities for growth. Indeed, our volleyball team has not only galvanized the KPC family but has also been

a source of national pride for Kenya and Africa.

19KPC Chairman John Ngumi with the KPC Ladies Volleyball Team after hosting them to lunch at Ole Sereni Hotel, Nairobi.



CORPORATE SOCIAL RESPONSIBILITY

20Corporate Communications Manager, Jason Nyantino donating building materials to Kinanie Secondary School in Athi River.

Corporate Communications Manager, Jason Nyantino donating food to Thange residents in Makueni County.



Photo Gallery

21



The Companies Act requires the directors to prepare financial statements for each financial year which give a true and fair view of

the state of affairs of the company as at the end of the financial year and of the operating results of the company for the year.

It also requires the directors to ensure that the company keeps proper accounting records which disclose with reasonable

accuracy at any time the financial position of the company. They are also responsible for safeguarding the assets of the

company.

The directors are responsible for the preparation and fair presentation of these financial statements in accordance

with International Financial Reporting Standards. This responsibility includes: designing, implementing and

maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free

from material misstatement, whether due to fraud or errors, selecting and applying appropriate accounting

policies, and making accounting estimates that are reasonable in the circumstances.

The directors accept responsibility for the annual financial statements, which have been prepared using

appropriate accounting policies supported by reasonable and prudent judgments and estimates, in conformity with

International Financial Reporting Standards and in the manner required by the Companies Act. The directors are

of the opinion that the financial statements give a true and fair view of the state of the financial affairs of the

company and of its operating results. The directors further accept responsibility for the maintenance of

accounting records which may be relied upon in the preparation of financial statements, as well as adequate

systems of internal financial control.

Nothing has come to the attention of the directors to indicate that the company will not remain a going concern for

at least the next twelve months from the date of this statement.

___________________________________ _______________________________

Director Director

2015

REPORT OF THE DIRECTORS



STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2015

2015 2014

(restated)

Note KShs’000 KShs’000

REVENUE 5 21,438,236 20,055,532

DIRECT COSTS 6 (7,967,492) (6,912,545)

_________ _________

GROSS PROFIT 13,470,744 13,142,987

OTHER INCOME 7 325,785 283,926

FINANCE INCOME 8(a) 203,208 156,905

FOREIGN EXCHANGE GAINS 8(b) 1,572,326 101,511

FINANCE COSTS 8(c) (3,629) -

ADMINISTRATION EXPENSES 9 (4,887,460) (3,410,379)

________ _________

PROFIT BEFORE TAXATION 10,680,974 10,274,950

TAXATION CHARGE 11(a) (3,459,347) (3,120,162)

_________ _________

PROFIT AFTER TAXATION 7,221,627 7,154,788

________ _________

OTHER COMPREHENSIVE LOSS

Items that will not be reclassified subsequently to profit or loss;

Adjustment in surplus on revaluation of property and equipment - 40,367

Deferred tax on the adjustment on revaluation of property and equipment - (12,110)

_________ _________

- 28,257

_________ _________

Remeasurement of defined benefit obligation 18(b) (558,385) (51,095)

Deferred tax relating to remeasurement of defined benefit obligation 167,516 15,329

_________ _________

(390,869) (35,766)

_________ _________

OTHER COMPREHENSIVE LOSS FOR THE YEAR ` (390,869) (7,509)

_________ _________

TOTAL COMPREHENSIVE INCOME FOR THE YEAR 6,830,758 7,147,279

======== =========

KShs KShs

EARNINGS PER SHARE 12 397 394

======== =========

FINANCIAL STATEMENTS



STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2015

2015 2014 1 July 2013 (restated) (restated)ASSETS Note KShs’000 KShs’000 KShs’000

Non-Current AssetsProperty, plant and equipment 14 43,585,328 40,018,087 39,035,411Leasehold land 15 4,915,357 4,997,694 5,087,043Intangible assets 16 5,567 2,985 6,910Investments 17 36,306 67,032 67,032Retirement benefits 18(b) 1,006,105 1,407,397 1,320,984Trade and other receivables 20 100,278 118,293 159,107 ___________ __________ __________Total Non-Current Assets 49,648,941 46,611,488 45,676,487 ___________ __________ __________Current AssetsInventories 19 1,520,586 1,443,982 1,128,042Trade and other receivables 20 10,565,001 9,440,453 7,824,695Taxation recoverable 11(c) 511,843 - 991,313Government securities 21 - 104,316 100,000Short term deposits 22(a) 8,492,671 5,938,961 1,982,203Bank and cash balances 22(b) 3,176,529 5,143,892 2,336,745 ___________ __________ __________Total current assets 24,266,630 22,071,604 14,362,998 ___________ __________ __________Non-current assets held for sale 23 - - 23,255 ___________ __________ __________Total Assets 73,915,571 68,683,092 60,062,740 ========== ========= =========

SHAREHOLDER’S FUNDS AND LIABILITIES

Capital And ReservesShare capital 24 363,466 363,466 363,466Share premium 512,289 512,289 512,289Retained earnings 54,787,041 47,454,374 40,335,352Revaluation reserve 10,022,712 10,834,021 10,805,764 ___________ __________ __________ 65,685,508 59,164,150 52,016,871 ___________ __________ __________Non-Current LiabilitiesDeferred taxation 25 5,623,522 5,101,901 5,070,728 ___________ __________ __________Current LiabilitiesDividend payable 13 309,400 - -Trade and other payables 26 1,983,422 3,894,399 2,672,535Due to related parties 28(c) 313,719 298,840 302,606Tax payable 11(c) - 223,802 - ___________ __________ _________ 2,606,541 4,417,041 2,975,141 ___________ __________ __________Total shareholder’s funds and liabilities 73,915,571 68,683,092 60,062,740 ========== ========= =========

The financial statements on pages 22 to 64 were approved and authorised for issue by the Board of Directors on 2015 and signed on their behalf by:

_____________________________ ________________________________ Director Director



STATEMENT OF CHANGES IN EQUITY FOR THE YEAR

ENDED 30 JUNE 2015

Share Share Retained Revaluation Total

Capital Premium Earnings Reserve Equity

Kshs `000 Kshs `000 Kshs `000 Kshs `000 Kshs `000

At 1 July 2013 363,466 512,289 40,327,952 11,859,254 53,062,961

Prior year adjustment on property,

plant and equipment (note 33) - - - (1,298,069) (1,298,069)

Prior year adjustment on leasehold

land (note 33) - - 7,400 (137,586) (130,186)

Prior year adjustment on debits in

payables (note 33) - - - (429,144) (429,144)

Prior year adjustment on deferred

taxes (note 33) - - - 811,309 811,309

_________ ________ _________ _________ _________

At 1 July 2013 (restated) 363,466 512,289 40,335,352 10,805,764 52,016,871

Total comprehensive income - - 7,119,022 28,257 7,147,279

________ ________ _________ _________ _________

At 30 June 2014 363,466 512,289 47,454,374 10,834,021 59,164,150

======== ======== ======== ========= =========

At 1 July 2014 (as previously reported) 363,466 512,289 47,394,969 11,887,511 60,158,235

Prior year adjustment on property,

plant and equipment (note 33) - - - (1,298,069) (1,298,069)

Prior year adjustment on leasehold

land (note 33) - - 7,400 (137,586) (130,186)

Prior year adjustment on debits in

payables (note 33) - - - (429,144) (429,144)

Prior year adjustment on deferred

taxes (note 33) - - - 811,309 811,309

Prior year adjustment on depreciation

(note 33) - - 52,005 - 52,005

_________ ________ _________ _________ _________

At 1 July 2014 (restated) 363,466 512,289 47,454,374 10,834,021 59,164,150

Total comprehensive income - - 6,830,758 - 6,830,758

Dividends declared- 2014 - - (309,400) - (309,400)

Transfer of excess depreciation - - 1,159,013 (1,159,013) -

Deferred tax on excess depreciation - - (347,704) 347,704 -

________ ________ _________ _________ __________

At 30 June 2015 363,466 512,289 54,787,041 10,022,712 65,685,508

======== ======== ========= ========= =========

The prior year adjustments relate to fair value adjustments on leasehold land, property plant and equipment and capital

work in progress previously recorded under trade payables (note 33).



STATEMENT OF CASH FLOWS FOR THE YEAR

ENDED 30 JUNE 2015

2015 2014

(restated)

Note KShs’000 KShs’000

CASH FLOWS FROM OPERATING ACTIVITIES

Cash generated from operations 27(a) 9,304,477 11,541,635

Interest received 203,132 152,589

Interest expense 8(c) (3,629) -

Income tax paid 11(c) (3,481,474) (1,823,764)

Withholding tax paid 11(c) (24,305) (46,891)

_________ _________

Net cash generated from operating activities 5,998,201 9,823,569

_________ _________

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment 27(c) (5,521,613) (3,099,614)

Proceeds from disposal of assets held for sale 23 - 23,255

Proceeds from disposal of property, plant and equipment 8,465 16,695

Purchase of intangible assets 16 (3,022) -

Proceeds from matured government securities 21 104,316 -

_________ _________

Net cash flows used in investing activities (5,411,854) (3,059,664)

_________ _________

NET INCREASE IN CASH

AND CASH EQUIVALENTS 586,347 6,763,905

CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 11,082,853 4,318,948

_________ _________

CASH AND CASH EQUIVALENTS AT END OF THE YEAR 27(b) 11,669,200 11,082,853

========= =========



NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2015

1. ACCOUNTING POLICIES

a) Statement of Compliance

The financial statements have been prepared in accordance with International Financial Reporting Standards.

For the Kenyan Companies Act reporting purposes, in these financial statements, the balance sheet is represented by/

equivalent to the statement of financial position and the profit and loss account is presented in the statement of profit or

loss and other comprehensive income.

Adoption of new and revised International Financial Reporting Standards (IFRSs)

(i) Relevant new standards and amendments to published standards effective for the year ended 30 June 2015

The following new and revised IFRSs were effective in the current year and had no material impact on the

amounts reported in these financial statements.

Amendments to IAS

32 Offsetting

Financial Assets and

Financial Liabilities

Amendments to IAS

36 Recoverable

Amount Disclosures

for Non-Financial

Assets

IFRIC 21 Levies

The amendments to IAS 32 clarify the requirements relating to the offset of financial

assets and financial liabilities. Specifically, the amendments clarify the meaning of ‘currently

has a legally enforceable right of set-off’ and ‘simultaneous realisation and settlement’. The

amendments have been applied retrospectively.

As the company does not have any financial assets and financial liabilities that qualify for offset,

the application of the amendments has had no impact on the disclosures or on the amounts

recognised in the company’s financial statements.

The amendments to IAS 36 remove the requirement to disclose the recoverable amount of a cash-generating unit (CGU) to which goodwill or other intangible assets with indefinite useful lives had been allocated when there has been no impairment or reversal of impairment of the related CGU. Furthermore, the amendments introduce additional disclosure requirementsapplicable to when the recoverable amount of an asset or a CGU is measured at fair value less costs of disposal. These new disclosures include the fair value hierarchy, key assumptions and valuation techniques used which are in line with the disclosure required by IFRS 13 Fair Value Measurements.

As the company does not have any cash-generating units (CGU) to which goodwill or other intangible assets with indefinite useful lives had been allocated, the application of the amendments has had no impact on the disclosures or on the amounts recognised in the company’s financial statements.

IFRIC 21 addresses the issue as to when to recognise a liability to pay a levy imposed by a government. The Interpretation defines a levy, and specifies that the obligating event that gives rise to the liability is the activity that triggers the payment of the levy, as identified by legislation. The Interpretation provides guidance on how different levy arrangements should be accountedfor, in particular, it clarifies that neither economic compulsion nor the going concern basis of financial statements preparation implies that an entity has a present obligation to pay a levy that will be triggered by operating in a future period.

The application of this Interpretation has had no material impact on the disclosures or on the amounts recognised in the company’s financial statements.





ACCOUNTING POLICIES (CONTINUED)

a) Statement of Compliance

Adoption of new and revised International Financial Reporting Standards (IFRSs) (Continued)

(ii) Relevant new and amended standards and interpretations in issue but not yet effective in the year ended

30 June 2015

New and Amendments to standards Effective for annual period beginning on or after

IFRS 9 Financial Instruments 1 January 2018

IFRS 15 Revenue from contracts with customers 1 January 2017

Amendments to IFRS 11 (Accounting for Acquisitions

of Interests in Joint Operations) 1 January 2016

Amendments to IAS 16 and IAS 38 (Clarification of

Acceptable Methods of Depreciation and Amortisation) 1 January 2016

IFRS 9 Financial Instruments

The replacement project on financial instruments consists of the following three phases:

• Phase 1: Classification and measurement of financial assets and financial liabilities;

• Phase 2: Impairment methodology; and

• Phase 3: Hedge accounting.

In July 2014, the IASB finalised the reform of financial instruments accounting and issued IFRS 9 (as

revised in 2014), which will supersede IAS 39 Financial Instruments: Recognition and Measurement in its

entirety upon the former’s effective date.

Compared to IFRS 9 (as revised in 2013), the 2014 version includes limited amendments to the

classification and measurement requirements by introducing a ‘fair value through other comprehensive

income’ (FVTOCI) measurement category for certain simple debt instruments. It also adds the impairment

requirements relating to the accounting for an entity’s expected credit losses on its financial assets and

commitments to extend credit.

The completed IFRS 9 (as revised in 2014) contains the requirements for a) the classification and

measurement of financial assets and financial liabilities, b) impairment methodology, and c) general hedge

accounting.





(ii) Relevant new and revised IFRSs in issue but not yet effective for the year ended 30 June 2015(Continued)

IFRS 9 Financial Instruments (Continued)

Phase 1: Classification and measurement of financial assets and financial liabilities

With respect to the classification and measurement under IFRS 9, all recognised financial assets that are currently within the scope of IAS 39 will be subsequently measured at either amortised cost or fair value.

Specifically:

• a debt instrument that (i) is held within a business model whose objective is to collect the contractual

cash flows and (ii) has contractual cash flows that are solely payments of principal and interest on the

principal amount outstanding must be measured at amortised cost (net of any write down for

impairment), unless the asset is designated at fair value through profit or loss (FVTPL) under the fair

value option.

• a debt instrument that (i) is held within a business model whose objective is achieved both by

collecting contractual cash flows and selling financial assets and (ii) has contractual terms of the

financial asset give rise on specified dates to cash flows that are solely payments of principal and

interest on the principal amount outstanding, must be measured at FVTOCI, unless the asset is

designated at FVTPL under the fair value option.

• all other debt instruments must be measured at FVTPL.

• all equity investments are to be measured in the statement of financial position at fair value, with

gains and losses recognised in profit or loss except that if an equity investment is not held for trading,

an irrevocable election can be made at initial recognition to measure the investment at FVTOCI, with

dividend income recognised in profit or loss.

IFRS 9 also contains requirements for the classification and measurement of financial liabilities and

derecognition requirements. One major change from IAS 39 relates to the presentation of changes in the

fair value of a financial liability designated as at FVTPL attributable to changes in the credit risk of that

liability. Under IFRS 9, such changes are presented in other comprehensive income, unless the

presentation of the effect of the change in the liability’s credit risk in other comprehensive income would

create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial

liability’s credit risk are not subsequently reclassified to profit or loss. Under IAS 39, the entire amount of

the change in the fair value of the financial liability designated as FVTPL is presented in profit or loss.





Phase 2: Impairment methodology

The impairment model under IFRS 9 reflects expected credit losses, as opposed to incurred credit losses

under IAS 39. Under the impairment approach in IFRS 9, it is no longer necessary for a credit event to

have occurred before credit losses are recognised. Instead, an entity always accounts for expected credit

losses and changes in those expected credit losses. The amount of expected credit losses should be updated

at each reporting date to reflect changes in credit risk since initial recognition.

Phase 3: Hedge accounting

The general hedge accounting requirements of IFRS 9 retain the three types of hedge accounting

mechanisms in IAS 39. However, greater flexibility has been introduced to the types of transactions

eligible for hedge accounting, specifically broadening the types of instruments that qualify as hedging

instruments and the types of risk components of non-financial items that are eligible for hedge accounting.

In addition, the effectiveness test has been overhauled and replaced with the principle of an ‘economic

relationship’. Retrospective assessment of hedge effectiveness is no longer required. Far more disclosure

requirements about an entity’s risk management activities have been introduced.







(ii) Relevant new and revised IFRSs in issue but not yet effective for the year ended 30 June 2015 (Continued)

IFRS 9, Financial Instruments (Continued)

The work on macro hedging by the IASB is still at a preliminary stage - a discussion paper was issued in

April 2014 to gather preliminary views and direction from constituents with a comment period ending on

17 October 2014.

Transitional provisions

IFRS 9 (as revised in 2014) is effective for annual periods beginning on or after 1 January 2018 with

earlier application permitted. If an entity elects to apply IFRS 9 early, it must apply all of the requirements

in IFRS 9 at the same time, except for those relating to:

1. the presentation of fair value gains and losses attributable to changes in the credit risk of financial

liabilities designated as at FVTPL, the requirements for which an entity may early apply without

applying the other requirements in IFRS 9; and

2. hedge accounting, for which an entity may choose to continue to apply the hedge accounting

requirements of IAS 39 instead of the requirements of IFRS 9.

An entity may early apply the earlier versions of IFRS 9 instead of the 2014 version if the entity’s date of

initial application of IFRS 9 is before 1 February 2015. The date of initial application is the beginning of

the reporting period when an entity first applies the requirements of IFRS 9.

IFRS 9 contains specific transitional provisions for i) classification and measurement of financial assets;

ii) impairment of financial assets; and iii) hedge accounting. Please see IFRS in details.

The directors anticipate that IFRS 9 will be adopted in the company’s financial statements for the annual

period beginning 1 January 2018 and that the application of IFRS 9 may not have a significant impact on

amounts reported in respect of the company’s financial assets and financial liabilities. However, it is not

practicable to provide a reasonable estimate of that effect until a detailed review is done.

IFRS 15 Revenue from contracts with customers

In May 2014, IFRS 15 was issued which establishes a single comprehensive model for entities to use in

accounting for revenue arising from contracts with customers. IFRS 15 will supersede the current revenue

recognition guidance including IAS 18 Revenue, IAS 11 Construction Contracts and the related

Interpretations when it becomes effective.






The core principle of IFRS 15 is that an entity should recognise revenue to depict the transfer of promised

goods or services to customers in an amount that reflects the consideration to which the entity expects to

be entitled in exchange for those goods or services. Specifically, the Standard introduces a 5-step approach

to revenue recognition:

Step 1: Identify the contract(s) with a customer

Step 2: Identify the performance obligations in the contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the performance obligations in the contract

Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation

Under IFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when

‘control’ of the goods or services underlying the particular performance obligation is transferred to the

customer. Far more prescriptive guidance has been added in IFRS 15 to deal with specific scenarios.

Furthermore, extensive disclosures are required by IFRS 15. However, it is not practicable to provide a

reasonable estimate of the effect of IFRS 15 until a detailed review has been completed.

(iii) Relevant new and revised IFRSs in issue but not yet effective for the year ended 30 June 2015 (Continued)

Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation

The amendments to IAS 16 prohibit entities from using a revenue-based depreciation method for items of

property, plant and equipment. The amendments to IAS 38 introduce a rebuttable presumption that

revenue is not an appropriate basis for amortisation of an intangible asset. This presumption can only be

rebutted in the following two limited circumstances:

a) when the intangible asset is expressed as a measure of revenue; or

b) when it can be demonstrated that revenue and consumption of the economic benefits of the intangible

asset are highly correlated.

The amendments apply prospectively for annual periods beginning on or after 1 January 2016. Currently,

the company uses the straight-line method for depreciation and amortisation for its property and

equipment, and intangible assets respectively.

The directors of the company do not anticipate that the application of the standard will have a significant

impact on the company’s financial statements.






Annual improvements 2010-2012 Cycle

The Annual Improvements to IFRSs 2010-2012 Cycle include a number of amendments to various IFRSs,

which are summarised below:

The amendments to IFRS 3 clarify that the standard does not apply to the accounting for the formation of

all types of joint arrangement in the financial statements of the joint arrangement itself.

The amendments to IFRS 13 clarify that the scope of the portfolio exception for measuring the fair value

of a group of financial assets and financial liabilities on a net basis includes all contracts that are within the

scope of, and accounted for in accordance with, IAS 39 or IFRS 9, even if those contracts do not meet the

definitions of financial assets or financial liabilities within IAS 32.

The amendments to IAS 16 and IAS 38 remove perceived inconsistencies in the accounting for

accumulated depreciation/amortisation when an item of property, plant and equipment or an intangible

asset is revalued. The amended standards clarify that the gross carrying amount is adjusted in a manner

consistent with the revaluation of the carrying amount of the asset and that accumulated

depreciation/amortisation is the difference between the gross carrying amount and the carrying amount

after taking into account accumulated impairment losses.

The amendments clarify that a management entity providing key management personnel services to the reporting

entity or to the parent of the reporting entity is a related party of the reporting entity. Consequently, the reporting

entity should disclose as related party transactions the amounts incurred for the service paid or payable to the

management entity for the provision of key management personnel servicesHowever, disclosure of the components

of compensation to key management personnel that is paid through another entity is not required.

The directors of the Company do not anticipate that the application of these amendments will have a significant

impact on the company’s financial statements.

(iv) Relevant new and revised IFRSs in issue but not yet effective for the year ended 30 June 2015 (Continued)

Annual Improvements 2011-2013 Cycle

The Annual Improvements to IFRSs 2011-2013 Cycle include a number of amendments to various IFRSs,

which are summarised below:

The amendments clarify that IFRS 3 does not apply to the accounting for the formation of all types of joint

arrangement in the financial statements of the joint arrangement itself.

The amendments clarify that the scope of the portfolio exception for measuring the fair value of a group of

financial assets and financial liabilities on a net basis includes all contracts that are within the scope of,

and accounted for in accordance with, IAS 39 or IFRS 9, even if those contracts do not meet the definitions of financial assets or financial liabilities within IAS 32.






The amendments clarify that IAS 40 and IFRS 3 are not mutually exclusive and application of both standards may be

required. Consequently, an entity acquiring investment property must determine whether:

(a) the property meets the definition of investment property in terms of IAS 40; and

(b) the transaction meets the definition of a business combination under IFRS 3. The directors of the Company do

not anticipate that the application of these amendments will have a significant impact on the company’s financial

statements.

Annual Improvements 2012 – 2014 cycle

The Annual Improvements to IFRSs 2012-2014 Cycle include a number of amendments to various IFRSs, which are summarised below:

It adds specific guidance in IFRS 5 for cases in which an entity reclassifies an asset from held for sale to held for distribution or vice versa and cases in which held-for-distribution accounting is discontinued.

It adds additional guidance to IFRS 7 to clarify whether a servicing contract is continuing involvement in a

transferred asset, and clarification on offsetting disclosures in condensed interim financial statements.

It clarifies under IAS 9 that the high quality corporate bonds used in estimating the discount rate for postemployment

benefits should be denominated in the same currency as the benefits to be paid.

It amends IAS 34 to clarify the meaning of ‘elsewhere in the interim report’ and require a cross-reference

The directors of the Company do not anticipate that the application of these amendments will have a

significant impact on the company’s financial statements.

(iv) Early adoption of standards

The company did not early-adopt new or amended standards in 2015.

Basis of preparation

The company prepares its financial statements under the historical cost convention. The principal accounting

policies adopted in the preparation of these financial statements are set out below:

Revenue recognition

Revenue represents invoiced value of services rendered during the year in relation to transportation and storage

of petroleum products, net of value added tax.

Local and export service fees are recognized based on deliveries made to customers on a monthly basis. The

storage fee is recognized on an accrual basis once customer products are delivered to the company’s storage

facilities. Amounts become payable once sales invoices are raised and delivered to customers. Interest income

is recognized as it accrues.






Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and any accumulated

impairment losses. Depreciation is calculated on a straight line basis at annual rates estimated to write off

carrying values of the assets over their expected useful lives. The annual depreciation rates used are:

Freehold land Nil

Buildings - residential 3% or period of lease whichever is less

Buildings - industrial 4% or period of lease whichever is less

Show ground pavilion, wooden and fences 20%

Pipeline and tanks 4%

Pumps, transformers and switch-gear 5%

Furniture, fittings and equipment 10%

Roads 20%

Helicopters 20%

Motor vehicles 25%

Computers 33%

Prepaid operating lease rentals

Payments to acquire interests in leasehold land are treated as prepaid operating lease rentals. They are stated at

historical cost and are amortized over the term of the related lease.

Impairment

At each balance sheet date, the company reviews the carrying amounts of its tangible and intangible assets to

determine whether there is any indication that those assets have suffered an impairment loss. If any such

indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the

impairment loss.

Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the

recoverable amount of the cash generating unit to which the asset belongs.

Assets held for sale

Assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a

sale transaction rather than through continuing use. This condition is regarded as met only when the sale is

highly probable and the asset (or disposal group) is available for immediate sale in its present condition.

Management must be committed to the sale, which should be expected to qualify for recognition as a

completed sale within one year from the date of classification.

Assets held for sale (Continued) Assets (and disposal groups) classified as held for sale are measured at the lower of the assets previous carrying amount and fair value less costs to sell.






Inventories Inventories are stated at the lower of cost and net realizable value. Cost comprises expenditure incurred in the normal course of business, including direct material costs on a weighted average basis. Net realizable value is the price at which the stock can be realized in the normal course of business after allowing for the costs of the realization and, where appropriate, the cost of conversion from its existing state to a realizable condition. Provision is made for obsolete, slow moving and defective stocks as and when determined. Fuel stocks belong to the shippers as per transportation and storage agreement signed between company and the shippers. Fuel stocks are therefore not included in the company’s statement of financial position but are disclosed separately per note 31.

Intangible assets Expenditure on acquired computer software programs is capitalized and amortized on the straight-line basis over their expected useful lives, normally not exceeding three years.

Retirement benefit obligation Until 30 June 2006, the company operated a defined benefit contribution pension scheme for eligible employees. With effect from 1 July 2006, the scheme was closed to new members and a defined contribution pension scheme was established. The assets of these schemes are held in separate trustee administered funds. The defined contribution scheme is funded by contributions from both the employees and employer. For the defined contribution pension scheme, the cost of providing benefits is limited to the company contributions. For defined retirement benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected immediately in the statement of financial position with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss. Past service cost is recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as service costs (including current service cost, past service cost, as well as gains and losses on curtailments and settlements), net interest expense or income and remeasurment. The company presents the first two components of defined benefit costs in profit or loss in the line item of pension cost-defined benefit scheme (included in staff costs). Curtailment gains and losses are accounted for as past service costs. The retirement benefit obligation recognised in the statement of financial position represents the actual deficit or surplus in the company’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans. The company also makes contributions to National Social Security Fund, a statutory defined contribution pension scheme. The company’s obligations under the scheme are limited to specific contributions legislated from time to time and are currently limited to a maximum of KShs. 200 per month per employee.






Taxation Income tax expense represents the sum of the tax currently payable and deferred tax.

(i) Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as

reported in the profit or loss because of items of income or expense that are taxable or deductible in other

years and items that are never taxable or deductible. The company’s liability for current tax is calculated

using tax rates that have been enacted or substantively enacted at the reporting date.

(ii) Deferred tax

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in

the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred

tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally

recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be

available against which those deductible temporary differences can be utilised. Such deferred tax assets and

liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition

(other than in a business combination) of other assets and liabilities in a transaction that affects neither the

taxable profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at the reporting date and reduced to the extent that it

is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be

recovered.

Dividends

Dividend income from investments is recognized when the shareholders’ rights to receive payment have been

established. Dividends payable are charged to equity in the period in which they are declared. Proposed dividends

are not accrued for until ratified in an annual general meeting by the shareholders.

Financial Instruments Investments

Investments are initially measured at fair value, plus directly attributable transaction costs. At subsequent reporting

dates, debt securities that the Company has the express intention and ability to hold to maturity (held-to-maturity

debt securities) are measured at amortized cost using the effective interest rate method, less any impairment loss

recognized to reflect irrecoverable amounts. An impairment loss is recognized in profit or loss when there is

objective evidence that the asset is impaired.

Investments other than held-to-maturity debt securities are classified as either investments held for trading or as

available-for-sale, and are measured at subsequent reporting dates at fair value. Where securities are held for

trading purposes, gains and losses arising from changes in fair value are included in profit or loss for the period.

For available for sale investments, gains and losses arising from changes in fair value are recognized through other

comprehensive income and accumulated in revaluation reserve, until the available for sale security is disposed of or

is determined to be impaired, at which time the cumulative gain or loss previously recognized in equity is included

in the profit or loss for the period.






Financial instruments (Continued)

Unquoted investments are classified as available for sale and are stated at cost as the fair value cannot be reliably

determined.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid

investments that are readily convertible to a known amount of cash and are subject to any insignificant risk of

changes in value.

Financial liabilities and equity instruments

Financial liabilities and equity instruments issued by the company are classified according to the substance of the

contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity

instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its

liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out below.

Borrowings

Interest-bearing loans and bank overdrafts are initially measured at fair value, and are subsequently measured at

amortized cost, using the effective interest rate method. Any difference between the proceeds (net of transaction

costs) and the settlement or redemption of borrowings is recognized over the term of the borrowings in accordance

with the company’s accounting policy for borrowing costs.

Trade payables

Trade payables are stated at their nominal value.

Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs.

Provision for liabilities and charges

Employees’ entitlements to annual leave are recognized when they accrue to employees. Provision is made for the

estimated liability in respect of annual leave on the reporting date.

Currency translations

Assets and liabilities that are denominated in foreign currencies are translated into Kenya shillings at the rates of

exchange ruling on the reporting date. Transactions during the year, which are expressed in foreign currencies, are

translated at the rates ruling on the dates of the transactions. Gains and losses on exchange are dealt with in the

profit or loss.

Accounting for leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and

rewards of ownership to the lessee. All other leases are classified as operating leases.






Accounting for leases (Continued)

The company as lessor

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial

direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased

asset and recognised on a straight-line basis over the lease term.

The company as lessee

Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where

another systematic basis is more representative of the time pattern in which economic benefits from the leased asset

are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which

they are incurred.

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a

liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis,

except where another systematic basis is more representative of the time pattern in which economic benefits from

the leased asset are consumed.

Provisions

Provisions are recognised when the company has a present obligation (legal or constructive) as a result of a past

event, it is probable that an outflow of resources embodying economic benefits will be required to settle the

obligation and a reliable estimate can be made of the amount of the obligation.

Comparatives

Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current

year.

2. CAPITAL RISK MANAGEMENT

The company manages its capital to ensure that it is able to continue as a going concern while maximizing the

return to stakeholders through the optimization of the debt and equity balance.

The capital structure of the company consists of cash and cash equivalents and equity attributed to equity holders

comprising issued capital, share premium and revenue reserves. The company had nil debt as at 30 June 2015

(2014– nil).

3. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Introduction and overview

The company’s activities expose it to a variety of financial risks and those activities involve the analysis,

evaluation, acceptance and management of some degree of risk or combination of risks. Taking risk is core to the

company’s business and operational risks are an inevitable consequence of being in business. The company’s aim is

therefore to achieve an appropriate balance between risk and return and minimise potential adverse effects on its

financial performance. The key types of risks include:

• Market risk – includes currency and interest rate risk

• Credit risk

• Liquidity risk







FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)

The company’s overall risk management programme focuses on the unpredictability of changes in the business

environment and seeks to minimise potential adverse effects of such risks on its financial performance within the

options available by setting acceptable levels of risks.

Financial risk management objectives (Continued)

The board of directors has overall responsibility for the establishment and oversight of the company’s risk

management framework.

The company’s treasury function provides services to the business, co-ordinates access to domestic financial

markets, monitors and manages the financial risks relating to the operations of the company.

Compliance with policies and exposure limits is reviewed by the internal auditors on a continuous basis.

The company’s treasury function, headed by the chief accountant - finance and reporting to the Finance Manager,

develops and monitors risks and policies implemented to mitigate risk exposures.

a) Market risk

The activities of the company expose it primarily to the financial risks of changes in foreign currency exchange

rates and interest rates. There has been no change to the company’s exposure to market risks or the manner in

which it manages and measures the risk.

Market risk is the risk arising from changes in market prices, such as interest rate, equity prices and foreign

exchange rates which will affect the company’s income or the value of its holding of financial instruments. The

objective of market risk management is to manage and control market risk exposures within acceptable

parameters, while optimising the return. Overall responsibility for managing market risk rests with the Audit

and Risk Management Committee.

(i) Foreign currency risk management

Exposure to exchange rate fluctuations arising from international trading commitments is minimized by

utilizing foreign currency reserves to settle maturing obligations. Revenue is spread on a 50-50 basis in

local and foreign currencies (USD). As at end of the year, the carrying amounts of the company’s foreign

currency denominated monetary assets and monetary liabilities are as follows:

GBP EUR USD JPY HKD

KShs’000 KShs’000 KShs’000 KShs’000 KShs’000

At 30 June 2015

Financial assets

Bank and cash balances - - 2,926,578 - -

Short term deposits - - 7,511,367 - -

Trade receivables - - 5,731,752 - -

_______ ________ _________ ________ ________

- - 16,169,697 - -

_______ ________ _________ ________ ________

Financial liabilities

Trade payables 265,215 13,120 312,295 - 4,271

_______ ________ _________ ________ ________

Net exposure (265,215) (13,120) 15,857,402 - (4,271)

======= ======== ========= ======== ========





FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

a) Market risk (Continued) (i) Foreign currency risk management (Continued)

GBP EUR USD JPY HKD KShs’000 KShs’000 KShs’000 KShs’000 KShs’000

At 30 June 2014 Financial assets Bank and cash balances - - 4,266,409 - - Short term deposits - 767,422 5,610,900 - - Trade receivables 341 797,375 5,717,762 25,773 - _______ ________ _________ ________ ________ 341 1,564,797 15,595,071 25,773 - _______ ________ _________ ________ ________ Financial liabilities Trade payables (3,189) (133,904) (185,354) - - _______ ________ _________ ________ ________ Net exposure (2,848) 1,430,893 15,409,717 25,773 - ======= ======== ========= ======== ========

Foreign currency sensitivity analysis

The main currency exposure that the company is exposed to relates to the fluctuation of the Kenya Shillings exchange

rates with the US Dollar and Euro currencies.

The table below details the company’s sensitivity to a 10% increase and decrease in the Kenya shilling against the

relevant foreign currencies. The sensitivity analysis includes only the outstanding foreign currency denominated

monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. A positive

number below indicates an increase in profit and other equity where the Kenya shilling strengthens 10% against the

relevant currency. For a weakening shilling against the relevant currency, there would be an equal opposite impact

on the profit and other equity, and the balances below would be negative.

2015 2014 KShs’000 KShs’000 Effect on Effect on Effect on Effect on profit equity profit equity

Currency - GB pounds + 10 percentage point movement 26,522 18,565 353 247 - 10 percentage point movement (26,522) (18,565) (353) (247) Currency - Euro + 10 percentage point movement 1,312 918 13,689 9,582 - 10 percentage point movement (1,312) (918) (13,689) (9,582) Currency - US dollars + 10 percentage point movement 1,585,740 1,110,018 1,590,154 1,113,108 - 10 percentage point movement (1,585,740) (1,110,018) (1,590,154) (1,113,108) Currency - JPY + 10 percentage point movement - - 2,577 1,804 - 10 percentage point movement - - (2,577) (1,804) Currency - HKD + 10 percentage point movement 427 299 - - - 10 percentage point movement (427) (299) - - ===== ===== ===== =====




a) Market risk (Continued)

(i) Foreign currency risk management (Continued)

The US Dollar impact is mainly attributed to the exposure on outstanding US Dollar receivables at year end while the Euro impact arises from the exposure on outstanding payables at the year end.

The sensitivity analysis is unrepresentative of the inherent foreign exchange risk as the year end exposure does not reflect the exposure during the year.

(ii) Interest risk management

The company is exposed to interest rate risk as it invests and borrows funds at both fixed and floating

interest rates. The risk is managed by the company by maintaining an appropriate mix between fixed

and floating rate borrowings.

Interest rate sensitivity analysis

The analysis is prepared assuming the amount of liability outstanding at the statement of financial

position date was outstanding for the whole year. If interest rates had been 0.5% higher/lower and all

other variables were held constant, the company’s profit before tax for the year ended 30 June 2015

would decrease/increase by KShs 7 million (2014 – KShs 4 million).

b) Credit risk management

Credit risk refers to the risk of financial loss to the company arising from a default by counterparty on its

contractual obligations. The company’s policy requires that it deals only with creditworthy counterparties

and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss

from defaults. The company also uses other publicly available financial information and its own trading

records to rate its major customers. The company’s exposure and the credit ratings of its counterparties are

continuously monitored and the aggregate value of transactions concluded is spread amongst approved

counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by

debt control unit.

Trade receivables consist of major players in the petroleum oil industry. Ongoing credit evaluation is

performed on the financial condition of accounts receivable and where appropriate, credit guarantee is

requested.

The company’s maximum exposure to credit risk as at 30 June 2015 is analyzed in the table below:

Fully performing Past due Impaired Gross total

KShs ‘000 KShs ‘000 KShs ‘000 KShs ‘000

Trade receivables 5,178,997 4,693,071 219,921 10,091,989

Other receivables 792,750 461 362,323 1,155,534

Bank balances 3,171,446 - - 3,171,446

Short term deposits 8,492,671 - - 8,492,671

__________ _________ ________ _________

17,635,864 4,693,532 582,244 22,911,640

========== ========= ======== =========








b) Credit risk management (Continued)

The company’s maximum exposure to credit risk as at 30 June 2014 is analysed in the table below:

Fully performing Past due Impaired Gross total KShs ‘000 KShs ‘000 KShs ‘000 KShs ‘000

Trade receivables 4,680,116 4,242,441 - 8,922,557 Other receivables 632,727 3,462 211,161 847,350 Bank balances 5,137,625 - - 5,137,625 Short term deposits 5,938,961 - - 5,938,961 Government securities 104,316 - - 104,316 _________ ________ ________ _________ 16,493,745 4,245,903 211,161 20,950,809 ========= ======== ======== =========

The default risk on the customers under the fully performing category is very low as they are active in paying their debts as they continue trading. The past due amounts have not been provided for because management and the board believe the amounts are recoverable.

c) Liquidity risk management

Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fall due.

The company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the company’s reputation.

The company manages liquidity risk by maintaining adequate reserves and banking facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

The table below analyses the company’s financial liabilities that will be settled on a net basis into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date.

Within 12 months Over 12months Total KShs ‘000 KShs ‘000 KShs ‘000 At 30 June 2015: Due to related parties 233,719 80,000 313,719 Trade payables 760,496 - 760,496 Other payables and accruals 1,222,926 - 1,222,926 ________ _______ ________ 2,217,141 80,000 2,297,141 ======== ======= ========

At 30 June 2014: Due to related parties 218,840 80,000 298,840 Trade payables 2,764,423 - 2,764,423 Other payables and accruals 1,129,975 - 1,129,975 ________ _______ ________ 4,113,238 80,000 4,193,238 ======== ======= ========



4. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

In the application of the company’s accounting policies, which are described in note 1, the directors are

required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that

are not readily apparent from other sources. The estimates and associated assumptions are based on historical

experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting

estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or

in the period of the revision and future periods if the revision affects both current and future periods. The

critical areas of accounting estimates and judgments in relation to the preparation of these financial statements

are as set out below:

a) Critical judgements in applying the company’s accounting policies

Held-to-maturity financial assets

The directors have reviewed the company’s held-to-maturity financial assets in the light of its capital

maintenance and liquidity requirements and have confirmed the company’s positive intention and ability to

hold those assets to maturity. The company did not have any held-to-maturity financial assets as at 30 June

2015 (30 June 2014: KShs 104 million).

b) Key sources of estimation uncertainty Actuarial valuation of defined benefits plan

The net asset under the defined benefit scheme is determined using actuarial valuation. The actuarial

valuation involves making assumptions about discount rates, expected rates of return on assets, future

salary increases, mortality rates and future pension increases. Due to the long term nature of these plans,

such estimates are subject to significant uncertainty.

Impairment of assets

At each reporting date, the company reviews the carrying amount of its financial, tangible and intangible

assets to determine whether there is any indication that the assets have suffered impairment. If any such

indication exists, the assets recoverable amount is estimated and an impairment loss is recognized in the

income statement whenever the carrying amount of the asset exceeds its recoverable amount.

Impairment losses on trade and other receivables

The company reviews its trade and other receivables to assess impairment regularly. In determining

whether an impairment loss should be recorded in the income statement, the company makes judgments as

to whether there is any observable data indicating that there is a measurable decrease in the estimated

future cash flows from the receivables, before a decrease can be identified.

This evidence may include observable data indicating that there has been an adverse change in the

payment status of customers or local economic conditions that correlate with defaults on assets in the

company. Management uses estimates based on historical loss experience for assets with credit risk

characteristics and objective evidence of impairment when scheduling its future cash flows. The

methodology and assumptions used for estimating both the amount and timing of future cash flows are

reviewed regularly to reduce any differences between loss estimates and actual loss experience.





5. REVENUE 2015 2014

KShs’000 KShs’000

Local service fees 7,909,057 7,382,754

Export service fees 11,821,449 11,098,107

Kipevu oil storage facility fees 1,624,565 1,490,949

Penalties on overstayed product 82,282 83,722

Penalties from ASE 883 -

_________ _________

21,438,236 20,055,532

========= =========

6. DIRECT COSTS

Pipeline maintenance staff costs (note 10) 2,124,773 1,786,794

Depreciation (note 14) 1,064,855 1,860,263

Pipeline maintenance costs 2,031,955 790,217

Electricity and fuel 2,356,283 2,077,810

Insurance 240,820 218,433

Other maintenance costs 64,362 85,754

Amortization of prepaid lease rentals (note 15) 82,337 89,349

Amortization of intangible assets (note 16) 2,107 3,925

________ ________

7,967,492 6,912,545

======== ========

7. OTHER INCOME

Helicopter income 5,682 12,741

Rent income 83,800 82,048

(Loss)/gain on disposal of property, plant and equipment (15,965) 8,872

Hydrant Income 59,523 56,689

Income from communication equipment 1,800 1,050

MTCC collections 98,673 92,847

Miscellaneous income 92,272 29,679

__________ __________

325,785 283,926

======== ========

8. (a) FINANCE INCOME Interest income on deposits 203,208 156,905

========= =========

(b) Foreign Exchange Gains 1,572,326 101,511

========= =========

(c) Finance Costs Interest expense 3,629 -

========= =========





2015 2014

(restated)


9. ADMINISTRATION EXPENSES

Administrative staff costs 2,525,733 2,075,423

Depreciation (note 14) 871,244 289,219

Other office and general expenses 989,124 515,437

Travelling and entertainment 36,684 27,860

Advertising and printing expenses 89,516 76,805

Rent and rates 16,183 7,537

Consultancy fees 78,899 46,012

Telephone and postage 24,177 23,109

Legal and professional expenses 161,344 209,922

Licenses and other fees 4,814 40,078

Motor vehicle expenses 51,852 55,238

Buildings repairs and maintenance 3,909 3,730

Bank charges 7,865 6,679

Penalties and interest on tax - 1,018

Auditors remuneration 8,448 8,448

Directors: - Performance incentive 7,560 5,400

- Other emoluments 4,928 11,384

- Sitting /duty allowance 5,180 7,080

_________ _________

4,887,460 3,410,379

======== ========

10. STAFF COSTS

Salaries and wages 3,648,251 3,259,947

Group life and medical cover 403,708 295,038

Pension-company contribution 272,436 221,189

Defined benefit plan (note 18(b)) (157,093) (137,508)

Staff welfare 373,845 154,885

Training 97,548 60,012

Recruitment costs 2,361 3,610

NSSF-company contribution 5,845 3,374

Staff uniforms 3,605 1,670

_________ _________

4,650,506 3,862,217

_________ _________

Split as follows:

Direct staff costs (note 6) 2,124,773 1,786,794

Administrative staff cost (note 9) 2,525,733 2,075,423

_________ _________

4,650,506 3,862,217

========= =========





2015 2014


11. TAXATION

a) Tax charge

Current taxation based on taxable profit at 30% 2,770,210 3,002,751

Tax underpayment from year 2010 - 83,019

_________ _________

2,770,210 3,085,770

_________ _________

Deferred tax charge (note 25) 689,137 34,392

_________ _________

Total taxation charge 3,459,347 3,120,162

======== =========

b) Reconciliation of expected tax based on profit before

taxation to taxation charge

Profit before taxation 10,680,974 10,274,950

========= =========

Tax at the applicable rate of 30% 3,204,292 3,082,485

Tax effect of expenses not deductible for tax purposes 255,055 -

Income not subject to tax - (45,342)


_________ _________

Total taxation charge 3,459,347 3,120,162

========= =========

c) Taxation (recoverable)/payable

Balance brought forward 223,802 (991,313)

Charge for the year (note 11(a)) 2,770,210 3,002,751


Installment tax payments in the year (3,481,474) (1,823,764)

Withholding tax paid on interest income (24,305) (46,891)

Advance tax paid (76) -

_________ ________

(511,843) 223,802

========= ========





12. EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the net profit attributable to ordinary shareholders by the weighted

average number of ordinary shares outstanding during the year.

Diluted earnings per share is calculated by dividing the net profit attributable to ordinary shareholders by the

weighted average number of ordinary shares outstanding during the year plus the weighted average number of

ordinary shares that would be issued on conversion of all dilutive potential ordinary shares into ordinary shares.

There were no potentially dilutive ordinary shares outstanding as at 30 June 2015 and 30 June 2014. Diluted

earnings per share are therefore same as basic earnings per share.

The following reflects the earnings and the share data used in the basic and diluted earnings per share computations:

2015 2014

(restated)

KShs KShs

Profit after taxation 7,221,627,000 7,154,788,000

Number of ordinary shares in issue (note 24) 18,173,300 18,173,300

Basic and diluted earnings per share (in KShs) 397 394

============ ============

13. DIVIDENDS PER SHARE

Proposed dividends are not accounted for until they have been ratified at the Annual General Meeting. A dividend

of KShs 309,400,000 was ratified for the year 2014 at the Annual General Meeting held on 19 August 2015.





14. PROPERTY, PLANT AND EQUIPMENT

Freehold property

Buildings and roads

Pipeline, pumps and

tanks

Equipment, furniture and

fittings Helicopters

Motor vehicles

&tractors

Capital work-in-progress Total

KShs '000 KShs '000 KShs '000 KShs '000 KShs '000 KShs '000 KShs '000 KShs '000

COST\VALUATION 1 July 2013 (as previously stated)

232,342 6,095,346 31,286,101 4,420,357 125,000 604,599 1,746,473 44,510,218

Prior year adjustment* 649,622 (848,767) (1,362,591) (2,369,569) (2,000) (188,697) (20,121) (4,142,123) _________ _________ _________ _________ ________ _________ _________ _________

1 July 2013 (restated) 881,964 5,246,579 29,923,510 2,050,788 123,000 415,902 1,726,352 40,368,095

Additions - - 249,347 70,655 315,915 95,371 2,408,693 3,139,981 Transfers from WIP - - - 148,801 - - (148,801) - Disposals - - - - - (11,118) - (11,118)

_________ _________ _________ _________ ________ ________ _________ _________

881,964 5,246,579 30,172,857 2,270,244 438,915 500,155 3,986,244 43,496,958 ======== ======== ======== ========= ======== ======== ========= =========

1 July 2014 (as previously stated)

236,542 6,258,906 31,493,745 4,639,813 440,915 688,852 3,880,310 47,639,083

Prior year adjustment* 645,422 (1,008,127) (1,325,088) (2,369,569) (2,000) (188,697) 105,934 (4,142,125) _________ _________ _________ _________ ________ _________ ________ _________

1 July 2014 (restated) 881,964 5,250,779 30,168,657 2,270,244 438,915 500,155 3,986,244 43,496,958

Additions - - 80,064 119,183 - 131,104 5,191,262 5,521,613 Transfers from WIP - 199,950 18,463 859,963 - - (1,078,376) - Transfers to intangible assets - - - - - - (1,667) (1,667) Disposals - - - (7,142) - (13,648) - (20,790)

________ ________ _________ _________ ________ ________ _________ _________

30 June 2015 881,964 5,450,729 30,267,184 3,242,248 438,915 617,611 8,097,463 48,996,114 ======== ======== ========= ========= ======== ======== ========= =========

*The prior year adjustment relates to the elimination of cost and accumulated depreciation and refinement of the revaluation surplus on assets that had been revalued as at 30 June 2013 but not uploaded into the fixed assets register as at 30 June 2014. See note 33.





Freehold property

Buildings and roads

Pipeline, pumps and

tanks

Equipment, furniture and

fittings Helicopters

Motor vehicles and

tractors

Capital work-in-progress Total

KShs '000 KShs '000 KShs '000 KShs '000 KShs '000 KShs '000 KShs '000 KShs '000 DEPRECIATION:


- 753,666 908,691 2,278,685 2,083 233,613 - 4,176,738

Prior year adjustment* - (473,066) (16,137) (2,145,291) (2,000) (207,560) - (2,844,054) ________ _________ _________ _________ ________ _________ ________ _________

1 July 2013 (restated) - 280,600 892,554 133,394 83 26,053 - 1,332,684

Charge for the year - 302,417 1,562,612 176,395 8,183 99,875 - 2,149,482 Eliminated on disposal - - - - - (3,295) - (3,295) ________ ________ _________ _________ ________ _________ ________ _________

30 June 2014 - 583,017 2,455,166 309,789 8,266 122,633 - 3,478,871

======== ======== ======== ========= ======== ======== ======== =========


- 1,087,715 2,235,171 2,605,070 85,001 361,975 - 6,374,932

Prior year adjustment* - (508,886) (18,281) (2,149,652) (2,000) (217,242) - (2,896,061) ________ ________ _________ _________ ________ _________ ________ _________

1 July 2014 (restated) - 578,829 2,216,890 455,418 83,001 144,733 - 3,478,871 Charge for the year - 301,939 1,248,243 187,936 88,183 109,798 - 1,936,099 Eliminated on disposal - - - (3,598) - (586) - (4,184) ________ ________ _________ _________ ________ _________ ________ _________

30 June 2015 - 880,768 3,465,133 639,756 171,184 253,945 - 5,410,786 ======== ======== ======== ========= ======== ======== ======== =========

NET BOOK VALUE

30 June 2015 881,964 4,569,961 26,802,051 2,602,492 267,731 363,666 8,097,463 43,585,328 ======== ======== ======== ======== ======== ======== ======== =========

30 June 2014 (restated) 881,964 4,671,950 27,951,767 1,814,826 355,914 355,422 3,986,244 40,018,087 ======== ======== ======== ======== ======== ======== ======== =========

14. PROPERTY, PLANT AND EQUIPMENT (Continued)

The Company commissioned M/S Tysons Limited to carry out a revaluation of all its assets in April 2013. The firm submitted its report in November 2013.

*The prior year adjustment relates to the elimination of cost and accumulated depreciation and refinement of the revaluation surplus on assets that had been revalued as at 30 June 2013 but not uploaded into the fixed assets register as at 30 June 2014. See note 33.







PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Details of the company’s property, plant and equipment and information about fair value hierarchy are as follows:

Level Level Level Fair value as

1 2 3 at 30 June

KShs’000 KShs’000 KShs’000 KShs’000

30 June 2015

Buildings and roads - - 4,569,961 4,569,961

Pipeline, pumps & tanks - - 26,802,051 26,802,051

Equipment, furniture and fittings - - 2,602,492 2, 602,492

Helicopters - - 267,731 267,731

Motor vehicles and tractors - - 363,666 363,666

________ ________ __________ _________

- - 34,605,901 34,605,901

======= ======= ========= =========

30 June 2014

Buildings and roads - - 4,671,950 4, 671,950

Pipeline, pumps & tanks - - 27,951,767 27,951,767

Equipment, furniture and fittings - - 1,814,826 1, 814,826

Helicopters - - 355,914 355,914

Motor vehicles and tractors - - 355,422 355,422

________ ________ __________ _________

- - 35,149,879 35,149,879

======= ======= ========= =========

If the property, plant and equipment were stated on the historical cost basis, the amounts would be as follows:

2015 2014


Cost 56,381,385 50,882,229

Accumulated depreciation (27,114,217) (25,182,302)

__________ __________

Net book value 29,267,168 25,699,927 ========== ==========

Depreciation charge has been spilt between administrative and direct costs as follows:

2015 2014


Total depreciation as per property, plant & equipment (note 14) 1,936,099 2,149,482

======== =========

Direct costs (note 6) 1,064,855 1,860,263

Administrative costs (note 9) 871,244 289,219

_________ _________

1,936,099 2,149,482

========= =========



15. LEASEHOLD LAND

2015 2014 KShs’000 KShs’000 COST\VALUATION 1 July 5,086,391 5,224,052 ________ ________ 30 June (as previously reported) 5,086,391 5,224,052 Prior year adjustment –note 33 - (137,586) ________ ________ 30 June (restated) 5,086,391 5,086,466 ________ ________ AMORTIZATION 1 July 88,697 6,823 Charge for the year 82,337 89,349 ________ ________ 30 June 171,034 96,172 ________ ________ 30 June (as previously reported) 171,034 96,172 Prior year adjustment – note 33 - (7,400) _________ _________ 171,034 88,772 ________ ________ NET BOOK VALUE 4,915,357 4,997,694 ======== ========

Payments to acquire leasehold interests in land are treated as prepaid lease rentals and amortized over the term of the lease. Leasehold land is held at valuation and categorised under level 3 of the fair value hierarchy.

Included under leasehold land is land valued at KShs 869,759,420 (2014: KShs 869,759,420) relating to the JKIA Embakasi Depot whose title is held under the Kenya Airports Authority (KAA). Based on correspondence between the two parties, KAA has expressly acknowledged that the land belongs to the company. The company is in a process of obtaining a title deed to the property to secure ownership.

16. INTANGIBLE ASSETS 2015 2014 COST KShs’000 KShs’000 1 July 365,041 365,041 Additions 3,022 - Transfers from property, plant and equipment 1,667 - ________ ________ 30 June 369,730 365,041 ________ ________ AMORTIZATION 1 July 362,056 358,131 Charge for the year 2,107 3,925 __________ ___________ 30 June 364,163 362,056 __________ ___________ NET BOOK VALUE 5,567 2,985 ======== ========

Intangible assets comprise cost of purchased computer software. Computer software costs are amortised over 3 years.





17. INVESTMENTS – at cost 2015 2014


Unquoted investments

Consolidated Bank of Kenya Limited 67,030 67,030

Impairment charge on Consolidated Bank of

Kenya Limited preference shares (30,726) -

________ _______

36,304 67,030

Petroleum Institute of East Africa 2 2

________ ________

36,306 67,032

======== ========

Details of the investment in Consolidated Bank of Kenya Limited are shown below:

746,500 ordinary shares of KShs 20 each 14,930 14,930

2,605,000 4% non-cumulative irredeemable

non-convertible preference shares of KShs 20 each 52,100 52,100

Impairment charge on Consolidated Bank of

Kenya Limited preference shares (30,726) -

_______ _______

36,304 67,030

======= =======

The investment in the Petroleum Institute of East Africa comprises one class “A” Redeemable Preference share of KShs

2,000. The investments are stated at cost as fair value cannot be reliably determined.

18. RETIREMENT BENEFITS

a) National Social Security Fund

This is a statutory defined contribution pension scheme in which both the employer and employee contribute equal

amounts. The amount contributed during the year has been charged to the profit or loss for the year.

b) Defined Benefit Scheme (Closed)

The company did not make any contributions to the scheme in the year (2014- nil). The most recent actuarial

valuation of the scheme’s assets and the present value of the defined benefits obligation as at 30 June 2015 were

carried out in August 2015 by the scheme’s Actuaries, Alexander Forbes Financial Services (E.A) Limited.

Amendments to the Retirement Benefit Regulations were announced by the Cabinet Secretary, National Treasury, in

the Finance Act 2015. This related to a clarification on the distribution of surplus on wind up of a defined benefit

scheme. The regulations provide for an equal sharing of surplus between members and the scheme sponsor upon

wind up of a scheme. As a result of these change, an asset ceiling has been applied to limit the defined benefit asset

to 50% of the surplus, which is the maximum available to the sponsor in the event the scheme is wound up. The

principal assumptions used for the purpose of the actuarial valuation were as follows:





RETIREMENT BENEFITS (CONTINUED)

b) Defined Benefit Scheme (Closed) (Continued)

2015 2014

Discount rate(s) 13.5% 13.0%

Future salary increases 5.0% 5.0%

Future pension increases 0.0% 0.0%

Mortality (pre-retirement) A1949-1952 A1949-1952

Mortality (post-retirement) a(55) m/f a(55) m/f

Withdrawals At rates consistent At rates consistent

with similar with similar

arrangements arrangements

Retirement age 60 years 60 years

======= ========

The amount recognized in the statement of profit or loss and other comprehensive income in respect of these defined benefit plan are as follows:

2015 2014


Total service cost 24,290 25,991

________ ________

Interest costs:

Interest cost on defined benefit obligation 682,176 617,050

Interest income on plan assets (863,559) (780,549)

________ ________

Net interest income (181,383) (163,499)

________ ________

Components of defined benefits plan recognized in profit or loss (157,093) (137,508)

======= ========

Actuarial gain obligation (449,612) (50,916)

Return on plan assets (excluding amount in interest cost) 1,891 102,011

Change in effect of asset ceiling (excluding amount in interest cost) 1,006,106 -

________ _________

Components of defined benefits plan recognized in other

comprehensive income 558,385 51,095

======= ========

The amount included in the statement of financial position arising from the entity’s obligation in respect of its defined benefit plans is as follows:

2015 2014


Present value of funded defined benefit obligation 5,328,848 5,398,734

Fair value of plan assets (7,341,059) (6,806,131)

Effect of asset ceiling 1,006,106 -

_________ _________

Present value of defined benefit asset (1,006,105) (1,407,397)

========= =========






b) Defined Benefit Scheme (Closed) (Continued)

The reconciliation of the amount included in the statement of financial position is as follows:

2015 2014


Net asset at the start of the year (1,407,397) (1,320,984)

Net income recognised in the income statement (157,093) (137,508)

Employer contributions -

Amount recognized in other comprehensive income 558,385 51,095

__________ __________

Present value of overfunded defined benefit asset (1,006,105) (1,407,397)

========= =========

Movements in the present value of the defined benefit obligation in the current year were as follows:

Opening defined benefit obligation 5,398,734 5,040,205

Current service cost 24,290 25,991

Interest cost 682,176 617,050

Contributions from plan participants - -

Actuarial gain due to change in assumptions (35,276) (50,916)

Actuarial gain due to experience (414,336) -

Benefits paid (326,740) (233,596)

________ ________

Closing defined benefit obligation 5,328,848 5,398,734

======== ========

Movements in the present value of the plan assets in the current year were as follows.

Opening fair value of plan assets (6,806,131) (6,361,189)

Interest income on plan assets (863,559) (780,549)

Contributions from the employer - -

Employee contributions - -

Benefits paid 326,740 233,596

Return on plan assets 1,891 102,011

__________ _________

Closing fair value of plan assets (7,341,059) (6,806,131)

========= =========

The fair value of the plan assets at the end of the reporting period for each category are as follows:

2015 2014


Equity instruments 2,092,896 2,074,457

Debt instruments 3,047,370 2,956,114

Property 1,855,793 1,548,478

Cash 345,000 227,082

_________ _________

Total scheme (assets) 7,341,059 6,806,131

========= =========






c) Defined Contribution Scheme:

Contributions to the Kenya Pipeline Company Staff Retirement Benefits Scheme are at 6% and 12% from employee

and employer respectively. The company’s liability is limited to any unpaid contributions.

19. INVENTORIES

2015 2014


Spare parts and consumables 1,686,962 1,610,358

Provision for obsolete stocks (166,376) (166,376)

________ ________

1,520,586 1,443,982

======== ========

20. TRADE AND OTHER RECEIVABLES

Trade receivables 10,091,989 8,922,557

Staff loans and advances 207,187 212,767

Prepaid construction costs 106,656 106,656

Prepaid expenses 264,077 312,354

Refundable deposits 9,931 9,467

Other debtors 567,683 206,106

_________ ________

11,247,523 9,769,907

_________ ________

Provision for bad and doubtful debts (582,244) (211,161)

_________ ________

10,665,279 9,558,746

_________ ________

Recoverable as follows:

Within one year 10,565,001 9,440,453

After one year (staff loans) 100,278 118,293

_________ ________

10,665,279 9,558,746

========= ========

Included in trade receivables is KShs 4.1 billion (2014 - KShs 3.7 billion) due from an Oil Marketing Company that

is the subject of a court dispute. No impairment loss has been recognized in respect of this amount as management

has opted to wait for the final outcome of an appeal.

The amounts recoverable after one year relate to staff loans and advances. The interest rate on the staff loans and

advances is as per prescribed basis of Fringe Benefits tax as given by Kenya Revenue Authority every quarter.





21. GOVERNMENT SECURITIES

2015 2014


Treasury bonds held to maturity - 104,316

======== ========

The treasury bond matured on 21 July 2014. The effective interest rate on treasury bond in the year was 9.75% p.a (2014 – 9.75%).

22. CASH AND SHORT TERM DEPOSITS

a) Short term deposits 2015 2014


Fixed deposits 8,492,671 5,938,961

======== ========

The fixed deposits have a tenor of 12 months and the effective interest rate in the year was 10.79% p.a.

(2014 – 10.17%).

2015 2014


b) Bank and cash balances

Barclays Bank of Kenya 3,132 3,136

Commercial Bank of Africa (KES) (106,357) 238,253

Commercial Bank of Africa (USD) 1,422,155 2,944,388

CFC Stanbic (KES) 71,942 7,526

CFC Stanbic (USD) 1,090,286 730,970

Citi Bank (KES) 354,400 149,779

Citi Bank (USD) 161,326 591,051

Cooperative Bank of Kenya 58,007 71,984

Equity Bank KES 21,864 49,162

Equity Bank USD 25,063 24,340

Kenya Commercial Bank 363 368

Standard Chartered (KES) 19,982 19,992

Standard Chartered (USD) 49,283 306,676

Petty Cash 5,083 6,267

________ ________

3,176,529 5,143,892

======== ========





23. ASSETS HELD FOR SALE

In 2007, the directors resolved to dispose of some of the company’s property and the leasehold land on which the

properties stand. Negotiations with several interested parties took place and thus the properties were classified as

held for sale. The sale was completed in the current year.

2015 2014

COST KShs’000 KShs’000

At 1 July - 32,953

Eliminated on disposal – current year - (23,255)

________ ________

At 30 June - 9,698

________ ________

DEPRECIATION

At 1 July and 30 June - (9,698)

________ ________

NET BOOK VALUE - -

======== ========

24. SHARE CAPITAL

Authorized:

19,369,580 Ordinary Shares of KShs 20 each 387,392 387,392

======== ========

Issued and fully paid:

18,173,300 Ordinary Shares of KShs 20 each 363,466 363,466

======== ========

25. DEFERRED TAX LIABILITY

Deferred taxes are calculated on all temporary differences under the liability method using the applicable rate,

currently at 30%. The make-up of the deferred tax liabilities in the year and the movement on the deferred tax

account during the year are presented below:

2015 2014


Deferred tax liability

Accelerated capital allowances 615,553 456,415

Deferred tax on retirement benefit plan assets 301,832 422,219

Deferred tax on revaluation surplus 4,295,448 4,283,338

Unrealized exchange gains 542,057 32,784

________ ________

5,754,890 5,194,756

========= ========





DEFERRED TAX LIABILITY (CONTINUED)

2015 2014


Deferred tax assets

General inventory provisions (49,913) (49,913)

Leave pay provision (57,026) (37,778)

General bad debts provision (24,429) (5,164)

________ ________

(131,368) (92,855)

________ ________

Net deferred tax liability 5,623,522 5,101,901

======== ========

The movement in deferred tax was as follows:

At 1 July (as previously reported) - 5,882,037

Prior year adjustment (note 33) - (811,309)

________ ________

As restated 5,101,901 5,070,728

Deferred tax charge (note 11(a)) 689,137 34,392

Deferred tax through other comprehensive income (167,516) (3,219)

________ ________

At the end of the year 5,623,522 5,101,901

======== ========

26. TRADE AND OTHER PAYABLES

Trade payables (as previously stated) - 2,335,279

Prior year adjustment (note 33) - 429,144

_________ _________

As restated 760,496 2,764,423

Other payables 1,032,776 1,004,112

Catering, training & tourism development levy 62 114

Leave pay provision 190,088 125,750

_________ _________

1,983,422 3,894,399

========= =========





27. NOTES TO THE STATEMENT OF CASH FLOWS

2015 2014

(restated)


a) Reconciliation of operating profit to cash generated

from operations

Profit before tax 10,680,974 10,274,950

Adjustments for:

Depreciation (note 14) 1,936,099 2,149,482

Amortization of leasehold land (note 15) 82,337 89,349

Amortization of intangible assets (note 16) 2,107 3,925

Loss/(gain) on disposal of property, plant and equipment 8,141 (8,872)

Interest income (203,208) (156,905)

Interest expense 3,629 -

Impairment of unquoted investments 30,726 -

__________ _________

Operating profit before working capital changes 12,540,805 12,351,929

Increase in inventories (76,604) (315,940)

Increase in trade and other receivables (1,106,533) (1,574,944)

(Decrease)/increase in trade and other payables (1,910,977) 1,221,864

Movement in related party balances 14,879 (3,766)

Movement in retirement benefit asset (note 18(b)) (157,093) (137,508)

__________ ________

Cash generated from operations 9,304,477 11,541,635

========= ========

b) Analysis of cash and cash equivalents

Short term deposits (note 22(a)) 8,492,671 5,938,961

Bank and cash balances 3,176,529 5,143,892

__________ _________

11,669,200 11,082,853

========== =========

c) Analysis of non cash transactions:

Total additions to property, plant and equipment (note 14) 5,521,613 3,139,981

Capital work in progress items pending settlement

as at 30 June - (40,367)

________ _________

Cash used in the purchase of property, plant and

equipment as presented on the cash flow statement 5,521,613 3,099,614

======== =========





28. RELATED PARTIES

Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions. A party is related to an entity if directly, or indirectly through one or more intermediaries, the party controls, is controlled by, or is under common control with, the entity (this includes parents, subsidiaries and fellow subsidiaries); has an interest in the entity that gives it significant influence over the entity; or has joint control over the entity; the party is an associate of the entity; the party is a joint venture in which the entity is a venture the party is a member of the key management personnel of the entity or its parent; the party is a close member of the family of any individual referred to in the above definitions; the party is an entity that is controlled, jointly controlled or significantly influenced by, or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in the above ; or the party is a post-employment benefit plan for the benefit of employees of the entity, or of any entity that is a related party of the entity.

(a) Key management compensation

The remuneration of directors and other members of key management during the year were as follows:

2015 2014


Key management salaries and benefits 98,002 218,783

======== =======

Directors’ remuneration

- Fees for services 5,180 7,080

- Other emoluments 12,488 16,784

________ _______

17,668 23,864

======== =======

(b) Related party transactions

In the normal course of business, transactions are conducted with related parties at terms and conditions similar to those offered to other customers. Transactions with related parties during the year and are disclosed below:

2015 2014


Services provided to National Oil Corporation (K) 937,670 876,478

Services received from Kenya Power & Lighting Co Limited 2,591,169 2,071,796

Services received from Ministry of Energy 384,000 384,000

_________ ________

3,912,839 3,332,274

======== =========

(c) Due to related parties

Ministry of Energy - LPG Project 80,000 80,000

Kenya Power & Lighting Company Limited 233,719 218,840

_________ ________

313,719 298,840

========= ========





29. FUTURE RENTAL COMMITMENTS UNDER OPERATING LEASES 2015 2014


The company as a lessor:

Within one year 398,492 393,267

In the second to fifth year inclusive 1,593,969 1,573,067

_________ ________

1,992,461 1,966,334

========= ========

The lease rental income earned during the year in respect of company’s property amounted to KShs 83,800,000 (2014 – KShs 82,048,000).

2015 2014


The company as a lessee:

Within one year 7,626 82,122

In the second to fifth year inclusive 395,358 328,488

_________ ________

402,984 410,610

========= =======

The total rental expense incurred during the year amounted to KShs 7,625,662 (2014-KShs 5,321,250).

30. CONTINGENT LIABILITIES 2015 2014


Products held on behalf of shippers (note 31) 724,490 906,580

Pending law suits 22,523,840 25,455,857

Guarantees and letters of credit 7,932,685 1,276,660

_________ _________

31,181,015 27,639,097

========= =========

Pending lawsuits relate to civil suits lodged against the company by various parties and include contingent liabilities related to irregular release of product, amounting to KShs 2,035,753,277 (2014: KShs 4,967,769,596). These suits are subject to arbitration proceedings.

31. FUEL STOCKS Fuel stocks belong to the Oil Marketing Companies (OMCs) as per Transportation and Storage Agreement signed

between the Kenya Pipeline Company Limited and the OMCs. Fuel stocks are therefore not included in the financial statements. As at 30 June 2015, the company held 386,649M3 (2014 – 366,940M3) third party fuel stocks with a Hydro-Carbon Value (HCV) of KShs 19,406,356,000 (2014 – KShs 26,222,679,000).

Included in the fuel stocks are quantities of 15,036M3 (2014 - 12,968M3) with a Hydro-Carbon Value (HCV) of KShs 724,490,000 (2014 – KShs 906,579,000) that represents differences noted between the quantities in the company’s system and the quantities ascertained during the annual fuel dip procedures. As a result, the statements sent to the Oil Marketing Companies (OMC’s) reflected quantities that were higher than the physical stock by 15,036M3 (2014 - 12,968M3). A reconciliation process was performed during the year to resolve the fuel stocks deficit valued at KShs 724,490,000 (2014 – KShs 906,579,000). As an outcome of this reconciliation exercise, which attributed the differences to incorrect posting of fuel stock issues in prior periods, management will be correcting the mispostings and adjust the stock entitlement of affected Oil Marketing Companies to reflect the correct physical quantities held on their behalf.





FUEL STOCKS (CONTINUED) The variance has been further analysed as follows;

2015 2014

Cubic Hydrocarbon Cubic Hydrocarbon

meters value meters value

(M3) KShs’000 (M3) KShs’000

Quantity per customer statement 386,649 19,406,356 366,940 26,222,679

Quantity per fuel dip exercise 371,613 18,681,866 353,972 25,316,100

_______ __________ _______ _________

Deficit 15,036 724,490 12,968 906,579

======= ========== ======= =========

32. CAPITAL COMMITMENTS

2015 2014


Authorized and contracted for 22,122,402 1,559,377

Authorized but not contracted for 7,116,288 25,544,033

__________ __________

29,238,690 27,103,410

========== ==========

The above amounts in respect of capital expenditure are included in the approved budget for the following year. These items relate majorly to Line 1 replacement costs and the delayed Line 5 Project.

33. PRIOR YEAR ADJUSTMENTS

(a) Restatement of audited statement of profit or loss and other comprehensive income

As previously Prior year

reported adjustment Restated

For the year ended 30 June 2014 Shs’000 Shs’000 Shs’000

Depreciation expense (1) 2,201,487 (52,005) 2,149,482

========= ======== =========

Effect on retained earnings (7) 47,394,969 52,005 47,446,974

========= ======== =========





33. PRIOR YEAR ADJUSTMENTS (CONTINUED)

(b) Restatement of audited statement of financial position

As previously Prior year

reported adjustment Restated

Shs’000 Shs’000 Shs’000

For the year ended 30 June 2014

Assets

Property, plant and equipment (3) 41,264,151 (1,246,064) 40,018,087

Leasehold land (2) 5,127,880 (130,186) 4,997,694

========= ======== =========

Equity and liabilities

Trade and other payables (4) (3,465,255) (429,144) (3,894,399)

Deferred tax liability (5) (5,913,210) 811,309 (5,101,901)

Revaluation reserve (6) (11,887,511) 1,053,490 (10,834,021)

Retained earnings (7) (47,394,969) (59,405) (47,454,374)

========== ======== =========

For the year ended 30 June 2013

Assets

Property, plant and equipment (1) 40,333,480 (1,298,069) 39,035,411

Leasehold land (2) 5,217,229 (130,186) 5,087,043

========= ======== =========

Equity and liabilities

Trade and other payables (4) (2,243,391) (429,144) (2,672,535)

Deferred tax liability (5) (5,882,037) 811,309 (5,070,728)

Revaluation reserve (6) (11,859,254) 1,053,490 (10,805,764)

Retained earnings (7) (40,327,952) (7,400) (40,335,352)

========== ======== =========

(1) Relates to adjustments on depreciation expense on completion of refinement of items recorded in the fixed

assets register

(2)Relates to the net impact on leasehold land on completion of refinement of items recorded in the leasehold

land register.

(3) Relates to the net impact on property, plant and equipment on completion of refinement of items recorded in the fixed assets register and transfer of capital items from trade and other payables.

(4) Relates to the effect on trade and other payables of transfer of capital items to capital work in progress.

(5) Relates to the net impact on deferred tax liability as a result of adjustments made to the surplus on revaluation of property, plant and equipment.

(6) Relates to the net impact on revaluation reserve of adjustments made to property, plant and equipment and leasehold land on completion of refinement of items recorded in the respective registers.

(7) Relates to effect on retained earnings of adjustments recorded to depreciation expense and leasehold land amortization on completion of refinement of items recorded in the respective registers.





NOTES TO THE FINANCIAL STATEMENTS (Continued)

34. INCORPORATION The company is domiciled and incorporated in Kenya under the Companies Act (Cap 486).

35. CURRENCY Financial statements are presented in Kenya Shillings (KShs’000).



2015KENYA PIPELINE COMPANY LIMITED


P.O BOX 73442 - 00200 | NAIROBI, KENYATEL: +254 20 260 6500-4 | +254 20 354 0032Kenpipe Plaza, Sekondi Road | Off. Nanyuki Road,Industrial Area.Email: [email protected] | www.kpc.co.ke

2015Annual Report

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2015€¦ · asset base kshs 73.9 billion key performance highlights 8% earnings per share kshs 397...

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